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SEBI Regulation of the Indian Securities Market: Major Development

The importance, developments of SEBI on the Indian Capital market and the implication over the time on the various regulations and regimes introduced.

The increasing scams, to regulate such scams a bill was passed in the parliament in 1992, giving birth to Securities Exchange Board of India (SEBI) Act 1992, an autonomous organization for reviewing, regulating the security market by introduction of various rules and regulations for market development.

The major developments can be classified into three important things,
  • The New guidelines for Book building, where a shift in fixed price regime to offer price introduced, as the former had an higher risk of failure if there is any market condition changes.
  • Introduction of Dematerialization and Electronic Book building.
  • Allowing participation of various Institutional Investors, Merchant Banking, registrars to issue, Share transfer agents.
Dematerialization was made compulsory in phased manner by September 2001, for quick and efficient allotment of securities and to avoid the problems of fund blocking.  The introduction of Electronic Trading mechanism has made the whole operational process simple and easier further which has also lead to reduce the manipulation of prices, correct prices for trades, and a complete shift in the fundamental operational working of major stock exchanges. 
The major advantages on introduction of Demat is, 
  • lead to reduce no delivery period, 
  • a greater liquidity as minimum trading lot sizes requirement are removed, 
  • short period of book closure for corporate, which helped them in making further decision like 
    • dividend payments, 
    • bonus issue decision quick.

"SEBI's Regulation of the Indian Securities Market: A Critical Review of the Major Developments" written by "G Sabarinathan".  


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